Estonia is a small Eastern European country located in the Baltic Sea Region and is a member of the European Union. It is the most northern territory of the Baltic States and has developed connections with Russia, Finland and Sweden as well as with its Baltic neighbours Latvia and Lithuania. Estonia tends to have high levels of investment and financial freedom as well as property rights while corporate taxation remains relatively low. Companies and foreign branches are subject only to income tax on all distributed profits which means the Corporate Income Tax (CIT) is not applied to retained or reinvested profits. Estonia is also known for its user-friendly e-portal environment and its passion for IT-related ventures which allows full interaction with all business-related authorities online through a fast-track electronic system.
The Estonian Private Limited Liability Company (Osaühing or OÜ) is the most common form of legal entity preferred by businesses small to medium in size. It can be incorporated by at least 1 founder with a minimum share capital of 2500 EUR ($3075 USD). In accordance with Estonian Commercial Law, both natural persons and legal entities are allowed as OÜ shareholders. Share capital doesn’t have to be paid at its incorporation as long as all shareholders are natural persons and the share capital amount is less than 25,000 EUR ($30,750 USD). There is no restriction to a shareholder’s citizenship or residence which means that the Board has to have least one member (director), but they can be a foreign resident. However, if there are no European Union residents within the Board, then a local representative is required, who will be authorized to accept official documents on company’s behalf.